A Michigan voluntary disclosure agreement (VDA) is a formal arrangement with the Michigan Department of Treasury that lets an eligible nonfiler disclose unpaid tax, file returns for an agreed lookback period, and pay the tax and statutory interest. If the applicant meets the program requirements and completes the agreement, Michigan provides a limited lookback and waives applicable penalties for the covered periods. Interest is not waived.
For ecommerce and cross-border sellers, the VDA can address Michigan sales and use tax obligations that arose before registration. Michigan applies one statewide sales tax rate and has no local sales tax, so sellers do not have to calculate separate city or county sales tax rates. Eligibility and the agreement’s terms depend on the seller’s facts; our team can help assess the situation and manage the process with the Treasury.
What is a Michigan voluntary disclosure agreement?
A Michigan VDA is a written agreement authorized under the state Revenue Act. It is intended to let qualifying nonfilers come forward, report tax they should have paid or collected, and become compliant going forward. In return for meeting the agreement’s conditions, the Michigan Department of Treasury limits the periods it may assess and waives applicable penalties for the covered lookback period.
The agreement is not automatic just because a business contacts Treasury or sends in a payment. The applicant must qualify, disclose the relevant facts, sign and return the agreement as directed, file the required returns, pay the tax and statutory interest, and meet the agreement’s future-compliance terms. The relief is the relief stated in the executed agreement.
Who can qualify, and can a Michigan resident apply?
Michigan’s program is designed for nonresidents who have a filing responsibility under nexus standards and have not previously filed for the tax being disclosed. The applicant must not have been contacted by the Department about that tax, be under audit for it, or be subject to civil action or criminal prosecution for the tax type. The applicant must also agree to pay the tax and statutory interest for the covered periods and comply going forward.
A person or business domiciled, incorporated, or resident in Michigan is not eligible for the state’s standard voluntary disclosure program. Michigan identifies a separate Taxpayer-Initiated Disclosure process for taxpayers who do not qualify for VDA, including Michigan residents. That is a different process, and penalty relief should not be assumed; ask Treasury or have our team confirm which route fits before making a disclosure.
Which Michigan taxes can a VDA cover?
Michigan law allows all taxes and fees administered under the Revenue Act to be included in a VDA, subject to eligibility and the agreement’s terms. For an online seller, the most common concern is sales tax on taxable sales, along with use tax obligations where applicable. A seller’s facts may also raise other Michigan-administered tax obligations; the application should identify the relevant tax types rather than assume the disclosure is limited to sales tax.
Michigan’s sales and use tax is administered at the state level. The state applies one statewide rate and does not impose local sales taxes, so a seller does not need to determine separate local rates for Michigan destinations. Whether a particular product, transaction, or service is taxable depends on its classification and circumstances; review the current Michigan Department of Treasury guidance before calculating the disclosure.
How far back does Michigan’s VDA look?
The Michigan Department of Treasury states that eligible VDA applicants may receive a limited lookback period of up to four years. The actual period and its start date are set out in the agreement, so do not treat four years as a guaranteed period for every applicant or assume it is calculated from a particular date without checking the proposed terms.
For periods before the lookback identified in an executed agreement, the statutory relief prevents assessment of covered tax, delinquency, penalty, or interest as provided by the law and agreement. The applicant still needs to file and pay for the periods included in the lookback. Confirm the exact periods with Treasury before signing, especially if the business has multiple tax types or a complicated sales history.
Does Michigan waive penalties or interest under a VDA?
For an eligible applicant who satisfies the statutory requirements, Michigan’s VDA provides for waiver of applicable penalties for the lookback period. The agreement also limits assessment for covered periods before the agreed lookback. This relief depends on completing the agreement as required; it is not a general waiver available simply by asking for one.
Statutory interest is not waived. The applicant must pay the tax and interest for the covered periods in the manner and within the time specified by the agreement. Before applying, estimate the potential tax and interest exposure and make sure the business can meet the payment and filing terms.
When must a seller register and collect Michigan tax?
A seller may have a Michigan filing and collection obligation when it has nexus with the state. For remote sellers, Michigan’s Department of Treasury says nexus exists when, in the previous calendar year, the seller made more than $100,000 in gross sales into Michigan or had 200 or more separate transactions with Michigan customers. The transaction test includes taxable, nontaxable, and exempt sales. Michigan says the obligation begins January 1 of the calendar year following the year the seller exceeded the economic nexus threshold.
Physical presence or other business activities can also create nexus, so a seller should not rely only on the remote-seller threshold. Once registration is required, sellers can register through Michigan Treasury Online (MTO). Michigan has one statewide sales tax rate and no local sales tax; product taxability and the seller’s specific nexus facts still need review. Check the current Treasury guidance if the relevant sales year or business activity is unclear.
How to apply for a Michigan voluntary disclosure agreement
The Michigan Department of Treasury’s application instructions call for Forms 4133 and 1353, and its program page also lists Form 151. The forms are submitted to Treasury’s Discovery and Tax Enforcement function by the methods and contact details shown on the current official program page. The application should accurately identify the business, tax type, relevant activity, and periods at issue. Do not register or contact the Department about the disclosed tax before checking how that could affect eligibility.
Treasury reviews the request and, if it proceeds, provides agreement terms and filing and payment instructions. Read the proposed lookback, covered taxes, deadlines, and conditions carefully. The agreement becomes effective when signed by the taxpayer or authorized representative and returned within the specified time. A preliminary communication does not itself provide the VDA’s limited lookback or penalty relief.
What happens after the agreement: registration and filing
After the agreement is finalized, the seller must complete the registration and filing steps specified by Treasury. For sales and use tax, registration is handled through Michigan Treasury Online or the registration method Treasury directs. The VDA agreement may include a registration form and specify the effective date, returns due, payment timing, and future compliance requirements.
Treasury assigns a filing frequency based on estimated activity and reviews filing frequency using tax liability. Sales and use tax returns may be monthly, quarterly, or annual; all registered filers must submit the required annual return. Returns and payments are generally due on the 20th for monthly or quarterly filers, while annual returns are due February 28, subject to the current Treasury rules and any applicable adjustment when a due date falls on a weekend or state holiday. Follow the frequency and deadlines assigned to the account, and file required returns even when no tax is due.
Can you apply after Treasury contacts or audits you?
Generally, no: a prior Department contact about the tax being disclosed or an audit for that tax makes an applicant ineligible for Michigan’s standard VDA. The same concern applies if the tax type is already subject to civil action or criminal prosecution. Do not assume that an audit or notice can be resolved by submitting a VDA application after the fact.
Michigan law also makes clear that communications before an agreement takes effect do not provide the VDA’s limited lookback or penalty waiver. If Treasury has already contacted the business, respond to the notice and confirm the available options directly with the Department or with an experienced tax professional. A different disclosure or resolution process may be relevant, but eligibility and relief must be confirmed for the specific case.
How Sales Tax Compliance USA handles your Michigan VDA
Our team provides a done-for-you service, not software. We begin by reviewing the seller’s Michigan sales, business activities, prior filings, and any Treasury correspondence to identify potential nexus, tax types, and eligibility concerns. We help organize the facts and prepare the disclosure materials for the seller’s review and authorization.
We then coordinate the application process, review the proposed agreement and lookback terms, and help prepare the required historical returns and payment calculations. After the agreement, we assist with Michigan Treasury Online registration, assigned filing obligations, and ongoing sales tax compliance. We do not promise acceptance, a particular lookback, or a specific tax result; Treasury makes those decisions, and the final position depends on the seller’s circumstances.
Not sure how this applies to your business? We handle US sales tax registration, filing and remittance for ecommerce sellers as a fully managed service, for one fee. Book a free consultation and we will review your own position with you.
Michigan sales and use tax filing cadence and key due-date mechanism
| Filing frequency assigned by Treasury | Return due-date mechanism | What the seller should do |
|---|---|---|
| Monthly | On or before the 20th day of the following month | File and pay for each assigned monthly period; submit the required annual return as well. |
| Quarterly | On or before the 20th day of the month following the quarter | Use the account’s assigned quarterly periods and submit the required annual return. |
| Annual | February 28 of the following year | File and pay by the annual due date and follow any updated frequency Treasury assigns. |
| Any assigned frequency when no tax is due | The due date for the account’s assigned filing period still applies | Submit the required return even if the period has no tax due. |
Frequently asked questions
What is a Michigan voluntary disclosure agreement?
It is a written agreement with the Michigan Department of Treasury that allows an eligible nonfiler to disclose unpaid tax, file for an agreed lookback period, and pay tax and statutory interest. If the applicant meets the requirements and completes the agreement, Michigan provides a limited lookback and waives applicable penalties for covered lookback periods.
Who is eligible for Michigan’s voluntary disclosure program?
The program is generally for nonresident nonfilers with a Michigan filing responsibility who have not previously filed for the tax being disclosed and have not been contacted or audited by Treasury for that tax. Applicants must not be subject to civil action or criminal prosecution for the tax type and must agree to pay the covered tax and interest and comply going forward. Treasury determines eligibility from the facts and application.
What taxes can be included in a Michigan VDA?
Michigan law permits all taxes and fees administered under the Revenue Act to be included, subject to eligibility and the agreement’s terms. Ecommerce sellers commonly need to examine sales and use tax, but should identify any other relevant Michigan-administered tax obligations in the application.
How far back does Michigan’s voluntary disclosure lookback period go?
Michigan states that an eligible applicant may receive a limited lookback of up to four years. The agreement sets the actual periods and start date, so confirm those terms with Treasury rather than assuming every case receives the same lookback.
Does Michigan waive penalties under a VDA?
Michigan provides for waiver of applicable penalties for the agreed lookback period when the applicant satisfies the statutory requirements and agreement terms. Statutory interest is not waived, and the applicant must pay it along with the tax as directed.
Can a Michigan resident apply for voluntary disclosure?
A person or business domiciled, incorporated, or resident in Michigan is not eligible for the standard Michigan VDA program. Treasury identifies a separate Taxpayer-Initiated Disclosure process that may be relevant, but its availability and relief should be confirmed for the taxpayer’s circumstances.
How do I apply for a Michigan voluntary disclosure agreement?
Use the current Michigan Department of Treasury instructions and submit the required Forms 4133, 1353, and 151 to the Department’s Discovery and Tax Enforcement function. Treasury reviews the request and, if it proceeds, provides agreement terms and filing and payment instructions. The agreement must be signed and returned within the stated time to become effective.
What happens if the Michigan Department of Treasury has already contacted or audited me?
Prior contact by Treasury about the tax being disclosed or an audit for that tax generally disqualifies the applicant from the standard VDA. Contact Treasury or a tax professional promptly to understand the response deadlines and whether another resolution process may apply; do not assume a VDA application will provide relief after contact.
How we handle this for you
The mechanics in Michigan are manageable on their own; the cost is the time it takes every single filing period, in every state you are registered in. We are a managed service: our team registers you with the Michigan Department of Treasury, prepares and files your returns, and keeps you compliant period after period. You get one point of contact and one invoice — you do not get another dashboard to learn.
See our sales tax compliance services, check where you have obligations with the nexus calculator, or talk to us about Michigan.
Official sources
- https://www.michigan.gov/taxes/coll-audit/voluntary-disclosure
- https://www.legislature.mi.gov/Laws/MCL?objectName=mcl-205-30c
- https://www.michigan.gov/taxes/business-taxes/sales-use-tax/information/remote-seller-faq
- https://www.michigan.gov/taxes/business-taxes/sales-use-tax
- https://www.michigan.gov/taxes/business-taxes/payroll-service-providers/filing-frequency
- https://www.michigan.gov/taxes/coll-audit/discovery/content/taxpayer-initiated-disclosure
Reviewed by Paul le Roux, CA(SA). Sales Tax Compliance USA handles US sales tax registration, filing and remittance for cross-border and domestic ecommerce sellers as a fully managed service.
This page is general information for educational purposes and does not constitute legal or tax advice. Sales tax rules change and depend on your specific facts. Consult a qualified tax professional about your own position.